In fact, 73% of the 30 deals that private equity completed during the quarter were in the fintech sector, with the remaining 27% of deal activities taking place in the NBFC sector, which is mostly concerned with housing, MSME, microfinance, and education.

“This shift aligns with a broader emphasis on sustainable profitability. As we navigate these dynamic economic conditions, investors are increasingly seeking clear and achievable paths to profitability in the ever-evolving financial ecosystem,” adds Iyer.

On the IPO and QIP front, two IPOs were launched, collectively valuing a substantial $186 million, marking a change in comparison to the previous quarter when no IPOs were observed. Further, the quarter saw three QIPs amounting to an impressive $1.2 billion. Notably, the banking sector played a dominant role in the QIP market, contributing a significant 54% to the overall QIP values for the quarter. This spike in IPO and QIP activity demonstrates a burgeoning investor appetite and interest in the sector’s offerings.

Moreover, three QIPs totaling a whopping $1.2 billion were approved during the quarter. With a noteworthy 54% of the total QIP values for the quarter, the banking industry clearly dominated the QIP market. A growing investor appetite and interest in the sector's products is demonstrated by the increase in IPO and QIP activity.

Recent trends further reveal that given the elevated global interest rates, global investors will continue to show increased interest in financial services, particularly lending-focused businesses with key areas for credit growth in India becoming affordable housing, MSMEs, and education. The insurance sector is also poised for growth with regulatory changes and global standards gaining prominence, although substantial investments are yet to come, says the report.

Meanwhile, investors are still drawn to fintech, but the DPDP Act of 2023 will have a big impact on data privacy, which will force financial services companies—especially those in the fintech space—to promptly reassess their operational plans.

Grant Thornton Bharat report

PE funds prioritise fintech, banking, NBFC investments: Grant Thornton